Democracy Does Cause Growth
2018/09/27 by Daron Acemoglu, Daron Acemoğlu, Suresh Naidu +2 · 36 citations
Social Sciences · Economics, Econometrics and Finance · #Corruption and Economic Development #Fiscal Policy and Economic Growth #Income, Poverty, and Inequality
paper · doi:10.1086/700936
Abstract
We provide evidence that democracy has a positive effect on GDP per capita. Our dynamic panel strategy controls for country fixed effects and the rich dynamics of GDP, which otherwise confound the effect of democracy. To reduce measurement error, we introduce a new indicator of democracy that consolidates previous measures. Our baseline results show that democratizations increase GDP per capita by about 20 percent in the long run. We find similar effects using a propensity score reweighting strategy as well as an instrumental-variables strategy using regional waves of democratization. The effects are similar across different levels of development and appear to be driven by greater investments in capital, schooling, and health.
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